Miftah: Loan payments under EFF will begin by end of Aug

ISLAMABAD: Miftah Ismail, Federal Minister of Finance,  on Tuesday said that loan payments under the Extended Fund Facility (EFF) will begin by the end of this month, as the International Monetary Fund (IMF) board is anticipated to convene on August 29.

The minister told a news conference that Islamabad had received a Letter of Intent (LoI) from the fund, which required certain revisions by the State Bank of Pakistan (SBP) and the Finance Ministry, which were completed following talks with the IMF.

The minister said that a fresh letter of intent was received today (Tuesday) and that he would return it after signing it, adding, “We anticipate the board meeting to be conducted in August, ideally on August 29th, and then the distribution will begin.”

According to the minister, the rupee has been performing as the finest currency in the world after 15 days of consistent rise versus the US dollar. Previously, the US dollar spiraled out of control after July 17 and hit a low of Rs239 per rupee.

He said that while the rupee was weakening in July, he urged that there was a need to limit imports and bring them up to the level of exports plus remittances to achieve balance.

According to the minister, imports totaled $.80 billion for the fiscal year 2021-22, while exports were $31.7 billion, resulting in a trade imbalance of $48.3 billion. Remittances totaled $30 billion throughout the fiscal year. As a result, despite PTI’s efforts to reduce it, the current account deficit (CAD) was reported at $17.5 billion last year, he added.

He said that the PTI was only focused on CAD and was not aware of the initiatives implemented by the Pakistan Muslim League administration to boost growth rate, infrastructure, building electricity, and communication.

He claimed that the PTI administration absorbed around Rs19,300 billion in debt during its four-year tenure, accounting for almost 79 percent of all debt incurred in 71 years.

Miftah said that PTI contributed CAD 17.5 billion, Rs.1400 billion in circular debt, Rs.200 billion in losses in Sui Northern gas, and left just 10.3 reserves at a time when the nation was obligated to pay $21 billion in debt in 2022-23, $3 billion in June-July.

Finance Minister wonders what true freedom the PTI has been preaching about while there is a $48 billion trade imbalance while the PTI administration is offering fuel subsidies, amnestying buddies, and bringing defaults. He claimed that the PTI was not the first administration to do so, citing an 8.1 percent deficit during Musharraf’s tenure.

According to him, the current administration restricted imports of non-essential and luxury items, followed by autos, air conditioners, refrigerators, and locally assembled products that required 90 percent imports.

Miftah Ismail said that the government was monitoring imports, exports, and remittances and that there had been $3.4 billion outflows and $4.1 billion outflows so far in August. So more money is coming in than going out, he said.

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According to the minister, imports decreased by 20% compared to the previous year, while exports climbed by 5%.